A PROMISE MADE, A PROMISE BROKEN By Gary Wilken January 04, 2014
At the heart of this issue is a K-12 education foundation formula requirement called the Mandatory Local Contribution. The Mandatory Local Contribution (2.65 mills of a borough's assessed value) is a mandatory reduction in the State of Alaska's aid in funding K-12 education across organized Alaska. It's the first step toward calculating the annual amount the state's General Fund will provide to fund K-12 education to every school district in organized Alaska. This reduction in support must then be replaced with local taxpayer money. (There is no local contribution requirement in unorganized Alaska; those schools are funded at 100% by State money). This reduction in financial assistance (really an unconstitutional dedicated State tax) has no basis other than it was just an idea requiring all governments in organized Alaska to first pony up local funds in order to then access the State's General Fund. The Mandatory Borough Act of 1963, which organized the Ketchikan Gateway Borough and seven others into broad local government structures, placed in law the following promise: No area incorporated as an organized borough shall be deprived of state services, revenues, or assistance or be otherwise penalized because of incorporation. (§ 1, Ch. 52, SLA 1963) Clearly that promise has been broken; in 2013 organized governments will have been deprived of over $220,000,000 in State assistance. That's the amount of the Mandatory Local Contribution. There are three reasons for others to support the efforts of Ketchikan. 1) The Constitution: Our State's constitution requires the State of Alaska to establish and maintain a system of public schools. (Art. VII § 1) Further, the Supreme Court has said the State alone bears that duty no other unit of government shares responsibility or authority. And in 2007 Superior Court Judge Gleason held that the State's duty to maintain a system of public schools includes the duty to provide adequate funding. Clearly, in 2013, the $220,000,000+ being heaped upon only the taxpayers of organized Alaska is funding which, under our constitution, is the responsibility of the State not the local taxpayer; thus Ketchikan's legal action. 2) Fairness: Today the Local Mandatory Contribution is a tax on organized Alaska. However, 55,000 individuals in nineteen school districts in unorganized Alaska receive 100% funding with $0 local contribution. Careful study (Local Contributions to Education in Alaska by Robert Hicks 2012) has shown there is no rational basis for this differential treatment. A number of currently exempt districts are affluent and fully capable of assisting in funding their schools, while a number of the districts, now subject to the local contribution requirement, are economically distressed. A State commission in 2003 found at least seven unorganized areas have the capacity to assist in funding their local schools at the same level as do governments in organized Alaska, but they do not - they have zero Required Local Contribution. Where's the fairness in that? 3) Equity: Here's an example of the lack of equity in application of the Mandatory Local Contribution in organized Alaska. There's one borough in our state that has more than 20 times the capacity to fund their local schools than does Ketchikan - 20 times more. (Alaska Taxable 2012 pgs. 52 & 53) Yet, because of a carefully placed loophole in the foundation formula (AS 14.17.410(b)(2)) their required local contribution is one-fourth that of the taxpayers in the Ketchikan Gateway Borough - one-fourth. Where is the equity in that? If the Mandatory Local Contribution is unfair and unequal to one Alaskan, it's unfair and unequal to all Alaskans. The specter of a broken promise and the subsequent application of this tax framework has inspired Ketchikan's effort on behalf of the taxpayers of Alaska. I applaud Ketchikan's efforts and encourage elected leaders and residents of other boroughs to become familiar with the Mandatory Local Contribution requirement and support in some meaningful way the effort to litigate its repeal. Gary Wilken About: " Gary Wilken, of Fairbanks, is a 62 year resident of Alaska, a retired small business owner who represented Fairbanks as a Republican in the Alaska Senate from 1997 to 2008. He served on the Senate Finance Committee for 10 years, four years as co-chairman." Received January 03, 2014 - Published January 04, 2014 Viewpoints - Opinion Letters:
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